Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-02-16

Va lusuidHCc ptOplt, dLON6 al OlileI E9dlttIS
are necessary:
IF it be true that history Is philosophy teach.
ing by examples we may find it profitable, on
this the sixteenth anniversary of the National
Board, 10 pause for Il moment on the threshold
of another year, and seek in the teachings OF
the past the principles that should guide a,iI
future conduct of the business. We may thus
discover the dangers that beset ctr way; learn
the true conditioss of success ascertain whittier
we are drifting, and gain strength OF purpose
for its proper management in the future.
The history of fire insurance in this country
is yet to be written. We know, however,
enough of its general course to enable us to
draw from it some of the fundamental princi-
pies upon which the business must be CON
Quoted, if it is 10 be successful. Statistics of a
reliable and general character do not auteda.e
this Board more than a dozen years, although
we have fragmentary ard imperfect iuforma-
!ion for some twenty or thiry years before that
period. Were we in possession Of statistical in
formation for forty yeaTa previous to the organ
ization of this BoGrd, as iull and accurate us we
have for the past sixteen years, we should.
doubtless, find thGtthe experience Of this Board
was antityped more than Snee in the history OF
those Years.
Fifty years ago there was i'll this city an asso-
eiation for establishing rates, or. at least. a
minimum rate on most knlSof property. These
rates were well observed and the business was
fairly remunerative. The great fire OF 1885
swept away 50 per cent OF all the capital and
assets then engaged in the business in shis city,
and reduced the aggregate surviving capital to
about one and three-quarter millions of collars.
This led to a closer union of the survivors, and
such as shen entered the field for the first time.
Rates were advanced and maintained for a
period OF years, and then became to q great ex-
tent, open and unrestricted.
THE fise of 1915 repeated the history OF 1885.
and companies were ruined us before TO be u
lowed by new capital, companies from abroad,
and tariff association OF fair rates and reason
able results. During the ten Years following
that fire the business received a great iu1petus
o,, crrlV n
ed the field. and although no great fires occurred
between 1853 and 1861 there was general set
ting in rates and consequent increase in COM
petition, attended with numerous failures and
loss of assets that ut the close of 1866 forty
six out of one hundred and forty-five companies
doing business in the State of New York re-
ported an impairment of 81 ,5l3.633 93. While
the ninety ana nine, embracing the largest and
strongest companies, showed a surplus of only
IS 367, 773 66. The net surplus of all the compa~
nies was thus reduced to less than Is per cent.
on their aggregate capital. The business had
become thoroughly demofalized; competit on
was excessive, and the losses and expenses had
eaten up 9954 per cent. of the sum total of pre-
MUM receipts The incoming year 1866. gave
early indications OF the outcome of year whose
losses and expenses footed up 10i 1900 on its
entire premium receipts. Under such condi-
tions the preliminary measures Were taken in
June. 1866, for the organization of this Board,
which was FULLY accomplished III the fol-
lowing month after the Portland fire
favor. and united all in the common effort
FOR safety and better things. Ofthe necessity OF
such union there can be no doubt, and subse-
auent experience has confirmed the wisdom OF
lhe undertaking. The work of organizing a
general board and local boards i'll field so vast
and varied ia its interests was very great The
history of the five years during which it main
tanned its efficiency demonstrated the advan-
tages to all of such union of purpose and action.
Consideration of some OF the results as shown
by othcial figures, will aid us i'll reaching a Just
appreciation of what we have done, what we
have failed to do, where we are o-day, and
what we may yet do-iudeed, must do if sue
cess is to be attained, or even safety secured fol
the future
'.The average percentage rate of premiums to
risks written curing the first five years of the
existence of the Board, from $50 to 1870 in
elusive. by con PARTON with the preceding six
years, from 1860 to 1865 inclusive, shows an in
crease from .6SiS to .S13i or n gain of IS cents
mills and one-tenth of mill on every Sl0C
written during that period. This gain
small as 1t may appear becomes nc
mean item when applied TO the enormous
amount of S20,S76, ,26l ,69l of risks written
during the first five years of active work by this
Board and yielded $50. AZ ole 50 more premiums
than would have been received on same risks
at the average rate of the six preceding years
The ratio of losses to risks written had. however
increased from 1907 to -5126. difference Of
.l0l9 on each 500 written, yielding an absolute
increase OF losses for the period, OF al 22 9l3 -
The net increase therefore, derived from the
labors of this Board in five years, will be foun(
to be sls2 ,lO2 ST.
early in 1870 the tide began to turn. ant
there was manifested on the part of many dis
position to relax efforts in maintaining the rule
and rates established by the Board; so that the
ratio of losses and expenses rose from 81 9-10l
per cent. in 1869 to 81 23-l00 per cent. in 1870
The downward tendency became stronger an6
continued open rates. and a competition rem
dered more active than ever before, until the
great fire at Chicago in October. 1871 swept ou
of existence uncounted millions of property
and placed comparison and analysis for thai
year beyond our reach for profitable considera
ton. Within the short space o.
n little over 13 months Boston repeated the
disaster ut Chicago. and completed the ruin o
many companies that were courageouSly work
lug 10 repair their losses and recover theil
former standing. These two Years. so astound
ing in their results, can only be made useful a.
factors in an analysis of a much longer period
of time; however, when embraced in the re
suits of a long series of years, aid in furnishing
a safe guide of what may be expected in year
to come how soon, no one can tell
"The influence of these TWO years of disaster
on the general percentage of the business, a:
well as It's general management. Will form al
interesting aud profitable study for the pains
taking aud profitable student though it is to be
hoped that the ratios of the next twenty-one
years may not be disturbed by iwo such over
whelming confagrationS as have character
lied the twcntv-One lust closed.
Now, Mr.. President. | want to call your at
tention to the fact that the ruin of an insurance
company means the ruin OF nearly every person
who is insured in that company. What is to
the interest OF the insurance company is to the
interest of every man. woman and child in the
state As said before those who have'placed
their earnings for years in insurance companies
are most vitality interested in seeing that the
business of those companies is conduct d
safely, securely and properly. Nov, Mr. Presi-
dent | want Tttaitn of the sta
which have been made by the Senator from san
Francisco that the insurance rates have been
increased instead OF decreased during the last
year. In 1856 there were one hundred and seven
companies receiving premiums in California
amounting to over s., ,lS6. 700 %, out of which
they mad to pay S1IS,0li % for brokerage and
agents commissions, distributing S2,265,a7i in
the payment of losses, at an expense OF ,53l
fer adjustment. The management of This large
business costing aboat soil 70, and estinat
ing that it will cost Sa00,0tO to cary the in
creased risks, which produces 100000 in
premiums, you viii notice the years profits fig
ures only sj96, 73i OF, or about 1916 per com.
pauy. of course this means
THAT SOME OF THE COMPANIES
May have made $1,000; others went out of bust
ness; others suffered a loss without going out oi
business, but the average, by consulting the
fgures-l07 companies in the State of California
during the last year was only S5.576.
| have a list, sir, giving the percentages Of
loss to premiums of over fifty companies; in
absuIdity OF the groInd taken by the Senator
from san Francisco as to the actual
profits OF insurance companies. Here is
Il table which | have. The ratio
of dividends 70 the capital Of the insurance
companies of the United states from the yeal
1870 T. the year 1855, and showing constantly
diminishing ratio irom the former date to the
latter. also desire to call your attention to a
table showing the ratio of commissions which
have been PAID TO the premiums IRON
1850 TO lSs5. This is, OF course, one
OF the great expenses of insurance
companies. and this ratio SLOWS continual in
creasing expenses. II actually doubled itsell
from the former date 10 the latter. AS / said be-
f1re.the object of com oinat on is that each class
of risks may receive the proper attention which
it deserves nom the com bined experience Of in
fer on account of a bad one, and when
the risks are equalized, that is all the peo.
pie of this state ought to ask. Now,
Mr. President, know that it is o
very easy thing 10 say that this bill is in the in
terest of the people. believe that of the forty
Senators upon this aoor, If they were all asked
at once which one of US is the most in the inter.
est of the people. why we would all be striving
10 put up our hands first and say, 81 am that
man" The people. though. are tired OF that
sort of thing. What they want is ar
gument upon propositions. / say the
people are not tired of compacts and cOmbi.
uations. This isan age, as said befoIe, of eoul-
pacts and combinations. There is not trade
anywhere thai has not its combinations and its
coInpacts Why, sir, suppose that we should in
tro5uce a bill here denying the right of organi-
Zation which extends ell over the United States
| refer 10 the Knights of Labor, the repreSeuta-
tiyes OF which are sitting on this floor.
These gentlemen who are strong and
becoming stronger every day, were organized
for the purpo c aud for no other purpose than
for pTotectiOn-and there is NOBODY who
say they have not the right to that organization.
They are organized for their seifprotertiOu.
But what do they do; Why, sir, they 20 20 The